- Canada’s October GDP forecast at 0.1% m/m
- US PCE data and Durable Goods Orders in focus
- US dollar opens on a mixed note, Commodity bloc outperforms
USDCAD snapshot open 1.3598-02, overnight range 1.3596-1.3657, close 1.3647, WTI $78.94, Gold $1798.82
The Canadian dollar recovered most of yesterday’s losses overnight mainly due to a modest rebound in S&P 500 futures.
FX markets are deathly quiet ahead of the Christmas holidays, year-end. Things will even be slower today because of the massive “weather bomb” that is laying waste to a large part of the US and Canada.
It will be a work from home or an outright holiday for many market participants which suggests today’s key US economic reports could have an outside impact on markets.
Fed Chair Jerome Powell’s supposedly favourite measure of inflation, the Personal Consumption Expenditure (PCE) index is expected to be unchanged at 0.3% m/m in November. A higher-than-expected result will be bullish for the US dollar and bearish for stocks as it implies the Fed will stick to its aggressive rate hike outlook.
However, weaker than expected Durable Goods Orders data or a soft Michigan Consumer Sentiment Index may mitigate any reaction to the PCE report.
Statistics Canada releases October GDP which is expected to rise a tepid 0.1% m/m. The results will be overshadowed by the US data unless GDP materially deviates from the forecast.
European stocks ticked higher with the German Dax index squeezing out a 0.40% gain. S&P 500 futures have risen 0.45% (as of 6:10 am ET). WTI oil rose 1.04% since Thursday’s close and is flirting but still below this week’s peak level of $79.85/b.
EURUSD traded in a 1.0588-1.0630 range in a quiet session. Eurozone data had little to no impact on trading. EURUSD remains underpinned by ECB President Christine Lagarde’s hawkish monetary policy outlook although the ongoing war in Ukraine and a winter energy crisis limit gains.
GBPUSD is at the top of its 1.2020-1.2089 range. Traders are still working although it seems most of the UK unions are on strike. GBPUSD continues to suffer from recession fears following yesterday’s dismal GDP report. The intraday GBPUSD technicals are bearish below 1.2140.
USDJPY found its session low of 132.17 after November CPI data showed inflation ticking higher to 3.8% y/y from 3.7% in October. Gains are limited due to speculation about the BoJ plans to start raising interest rates.
AUDUSD is at the top of its overnight 0.6662-0.6710 range supported by firmer commodity prices, and a softer US dollar against the majors.
Happy Holidays and best wishes for the season from all of us at Knightsbridge Foreign Exchange.
The next daily update will be Tuesday January 3, 2023.
